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farm technology

Episode #29: Agtech with Kit Barron, FarmTogether

In this episode, Millionacres editor Deidre Woollard talks with Kit Barron, Head of Automation & AI at FarmTogether about agriculture, farm technology, investing in farmland, and the future of how people will eat.

Kit Barron is the Head of AI and Automation at FarmTogether, one of the companies in the farmland investing place. Kit's focus is on leveraging technology to shape the future of food and agriculture. He spent six years at the Climate Corporation, where he helped build the world's leading AgTech platform, and has also worked at the CapLog Group, Grupo Bimbo and Harvard's Rockefeller Center for Latin American Studies. Learn more at FarmTogether.com.

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Transcript

Deidre Woollard: Hello, I'm Deidre Woollard, an editor at Millionacres and thank you so much for tuning in to The Millionacres Podcast. A friend and I were talking recently about the potential available in agtech for investors. We've discussed farmland investing on this podcast before, but I wanted to get deeper into agtech and the potential investable ideas around both agtech and real estate. After all, when Bill Gates is the biggest owner of farmland, that's a sign that tech and food supply are starting to merge. To explore that topic some more today, I'm speaking with Kit Barron who is the head of AI and automation at FarmTogether, which is one of the companies making moves in the farmland investing space. Kit's focus is on leveraging technology to shape the future of food and agriculture. He spent six years at The Climate Corporation where he helped build the world's leading agtech platform. He's also worked at the CapLog Group, Grupo Bimbo, and Harvard's Rockefeller Center for Latin American Studies. Hi, Kit. I'm excited to chat with you today.

Kit Barron: Thanks so much for having me on. I've been a big fan of Millionacres and I'm honored to be on the podcast today.

Deidre Woollard: Excellent. I found myself just fascinated by agtech recently. I know that there have been some big moves on the investing side with different startups being funded. Are you seeing that interest as well?

Kit Barron: Yeah, absolutely, I think when I started working in the field, or at least being aware of the term agtech about 10 years ago. Most people hadn't heard of it at all. But I take the long view, and if you think about it, we as a species have always invested the best of our technology in the pursuit of agriculture. Maybe apart from war, agriculture might be the oldest applications of technology that we've pursued as a species.

Deidre Woollard: Well, that's really interesting. I think some people may not know what agtech is or what some of the possibilities are that are happening right now. What are some of the things you're excited about?

Kit Barron: When I think about agtech, the term can be applied to a diverse array of innovation happening. I break it up into a couple of different categories. The first of them is innovation in the biology and biotech space. You have things like [inaudible 00:02:48] advances in traditional breeding powered by data science, you have GMOs, you have gene editing with CRISPR-Cas9. There's a whole area around microbials now. We talk a lot about the gut microbiome and how bacteria are influencing human health. Well, it turns out that bacteria play a huge role in the ecosystem on the farmland and we're just beginning to scrape the surface of that. That's the category I think for biology and biotech. The next one I think about is really the hardware. This breaks down into a couple of different categories. You have the robotics, and we can talk a little bit more later about this, but agriculture has really been on the forefront of self-driving and autonomous equipment. We've had GPS auto-steer tractors in the field for almost 20 years now. There's a whole fascinating group of companies that are building out the next generation of autonomous equipment in the fields. I also tend to group in the hardware space some of the sensor ecosystem. These are things that measure climatic variables and attributes of the soil. Also, satellites and drones and all of these other ways to remotely sense data about our farm are just proliferating right now. I think farms are really becoming, thanks to these sensors, some of the most data-rich businesses and places on earth. That brings me to the third category. We talked about biology. We talked about hardware. The next is data. What do all of these sensors do? They generate data, and how can this data be applied? There are a number of companies that are using this data to help farmers select the right inputs, evaluate their performance, and be more efficient operators, and software really helps get those data insights to the farmer. There's a bunch of other categories that I'm not as familiar with, things like chemistry and different practices that are evolving. But for me, the three big ones in agtech are the biology, the hardware, and the data and software.

Deidre Woollard: Let's start with this biome idea because I think this is really fascinating. How large is each individual biome? Is it similar to the ways that we see different geographic regions, or is it more individual crops? How does that work out?

Kit Barron: One thing I learned in my career in ag is that agriculture is not monolithic. Even when you're looking at the same crop, let's say corn, there are huge differences in terms of the way it's farmed, the types of varietals that are used, the type of soil and weather. When I think about that cross-section of the crop and the geography, the biome, I think about these what we call crop geographies. That really helps us say, are there similarities between tree nuts grown in the central valley of California, how different is that than the way hazelnuts are grown in Oregon, for example. Starting to find these similarities between crop and geography regions can be helpful in understanding what's happening in those areas.

Deidre Woollard: Interesting. As far as the hardware, is that something that you're seeing farmers be slow to adapt? Obviously, farming equipment in a traditional sense has looked mostly the same for a long period of time, and now, it seems like it's changing really rapidly.

Kit Barron: I would say that in general, farmers are early adopters of technology. Now, they might not go all-in with the latest thing on the shelf. They maybe try it out on a field or a test plot. But I think there's a fundamental innovators' spirit that lies at the heart of most good farmers. You're constantly having to try out new things to stay ahead of the market and stay ahead of things that are happening with pests and disease. When it comes to hardware and equipment, one of the things that I think has changed a lot over the past 20 years is the extent to which the farm machinery has gotten larger, has gotten better connected, and has gotten smarter. I would actually say that here in San Francisco, a lot of my friends and people in the neighborhood work on the autonomous vehicle space. I also like to remind them that we've had self-driving or self-steering GPS-guided combines and tractors for almost 20 years on the farm. In many ways, the farm is the perfect place to first roll out some of these technologies. You're not worried about hitting the biker or the cat running across the street. Maybe there's turkeys, a little different problem, but the broad open field is a wonderful place to pilot a lot of interesting autonomous hardware.

Deidre Woollard: Does that also apply to some of the labor? I've seen some of the startups that are involved in figuring out ways to automate some of the picking and maybe change some of how things are gathered and harvested.

Kit Barron: Yeah. When it comes to produce in tree fruits and berries, it's largely manual today. Part of the challenge there is that in contrast to the grains where you could have a giant combine that has a 40 foot mouth essentially that can bring in large swaths of grain, cut it down, process it, dump it out in its bin, each fruit and vegetable requires a slightly different approach to harvesting. There's a lot more complexity in the robotics space when it comes to harvesting fruits, vegetables, and produce. But there's a lot of interesting companies at the same time that are focused on solving those problems. Particularly when it comes to harvesting more delicate things like you can imagine a strawberry or a kiwi, one of the important parts of that technology stack is the ability for the machine to correctly identify the thing that it's picking. Imagine a ripe strawberry, you have to be really careful. Even a human hand can squish it if they're not too careful. So there's some really interesting applications of image processing and computer vision on some of the late generation harvesting equipment.

Deidre Woollard: Would that be something that maybe uses machine learning because it's gradually learning what something is and whether or not it's ripe and things like that?

Kit Barron: Absolutely. Yeah, you have to train the machine effectively to recognize the thing it's supposed to pick, be able to distinguish between the ripe tomato and the unripe tomato. There's a fascinating company in New Zealand, of course focused on kiwis somewhat stereotypically, but they've actually developed a machine learning-powered pollinator for the kiwi trees. What they do is they've trained the machine to identify flowers that have just opened. They take a little jet that has water with a little bit of pollen suspended in the water and spray a targeted mist or several droplets at that open flower. You could imagine this machine going underneath these blossoming kiwi plants, spraying little droplets with suspended pollen in each ready blossom. Fascinating application of machine learning.

Deidre Woollard: That is really fascinating, because I know one of the things in California, for example with the almonds, they have to bring in bees now to pollinate, and that's part of the process now. Is something like that could be adapted to maybe solve some of the problems that we have because we don't have as many bees as we need?

Kit Barron: Yeah. Bees are absolutely an important actor. I get really optimistic about a couple of companies that are really helping make accessing bees more efficient. There's actually bee-focused startups that I think would fall within the realm of agtech to make it easier to get bees as a service or bees on demand. [laughs] The BaaS business is burgeoning.

Deidre Woollard: [laughs] I love that. You mentioned a point about farmers and adopting technology. I think farmers also, it seems to me, they always made data-based decisions, which I think businesses are catching onto that more. You've stood at the intersection between the two. I know you have an MBA in agribusiness from Tufts. What drew you to that intersection of those two worlds?

Kit Barron: There's part family history and part professional history here. My grandfather grew up on an Iowa popcorn farm. Talking about agtech, one of the interesting innovations in corn farming back in the early 20th century was, during the world war, when you talk about packing peanuts today, popcorn was the perfect thing to store munitions in and ship across because it was light, it was fluffy, and then the horses on the other end of the Atlantic could eat it once it arrived. My grandfather's farm transitioned from horses to popcorn in part because of World War I. Just a little family anecdote about how technology and innovation and ag have always been present in the industry. But he ended up leaving in the '30s and moved to the big cities in the East Coast, but he always had the best vegetable garden around and had these wonderful stories about growing up on the farm, and it was where we went for family reunions. So I think that instilled a passion and love with the land in me. Then my mom was also influential in helping me think about food systems and where food came from. After college, I really got into the international development space focused on this idea that 25 percent of people across the world work in agriculture in some capacity, and that's just fascinating. But in our modern society here in the States, in many cases, it's an afterthought. We spend this huge part of our lives buying, transporting, preparing, eating, cleaning up after the food, yet it's just not front of mind when you think about investing in business. So I felt like it was an overlooked and incredibly important thing for people to get into. For me, it was a logical connection between that family background, some of that emotional ties to the land, and where I thought some big impact could come.

Deidre Woollard: That's fascinating about the popcorn used as packing. I wish they still did that. There is that move now toward better materials, materials that biodegrade because I think we're all very aware of landfills. Is that something else that you see as the potential for farming? Is some of the materials like hemp can be used for packing?

Kit Barron: Completely. It's amazing how much genetic potential and variety is packed in a single seed, and we're seeing it. Largely, I'm amazed at how many things that I used to either try to recycle or throw away are now plant-based, and here in California, you could compost them. But you can start to imagine with tools like CRISPR gene editing technology, you could start to train a plant to produce more of the polymers that make it better equipped to be packing material. It's not only novel processes to transform the harvest after it's grown but also ways where you can actually work with the genetics of the plant to specifically grow for use cases like packing.

Deidre Woollard: Which brings me to this idea about whether or not we need to change the way we eat. There has been a focus on plant proteins. We're seeing companies like Beyond Meat and Impossible Food become billion dollar companies. There's also this movement for insect protein and how to make that more palatable for people. Do you think that there's going to be a fundamental shift and are we already in the midst of it?

Kit Barron: The Food and Agriculture Organization of the UN estimates that in about 10 years, we need to be growing about 40 percent more grains than we do today just to feed the population. A big part of that is because we have a huge growth in the middle class. Pew did a study a couple of years ago that showed that China's middle class had grown from about 40 million people in 2000 to roughly 700 million people in 2018, from 40 million to 700 million. One of the first things a family does when you move into the middle class is you celebrate. You buy meat. Personally, I love a good bone-in ribeye or a big fatty eye or a [inaudible 00:16:32] pork chop. But the reality is we can't scale our food supply if everybody is going to be eating large amounts of animal protein all the time, or at least the way we've been raising it in the past. The way I think about it is that there are a lot of different parts to the solution. I don't think there's any one thing, it's not like everybody going vegan and it's not everybody eating termite flour. But I think there's a whole patchwork of opportunities to find more sustainable ways to get that animal protein, from more efficient farmed fish to better genetics from the plants, and a vertical farm and indoor farming can be part of it, lab-grown meat is fascinating. I joked about insect flour but the potential of a termite mound to produce massive amounts of healthy protein is also pretty fascinating. I see them all as part of the solution and I think there's this golden age of food science, data science, and bioscience coming together to solve that problem. It's just a fascinating time for people that are investing in the space and then for younger people looking for career directions.

Deidre Woollard: I think the other thing I'm worried about too is water. I lived in Southern California for a while and I became very, very aware of the issues of drought. Certainly, we're seeing it all across the country. Do you think that's part of agtech as well? Maybe it's engineering seeds that need less water or things like that.

Kit Barron: Yes, absolutely. There's a couple of parts to that. One is the genetics as you mentioned. In the '90s and 2000s, there was a big effort to develop more drought-tolerant and drought-resistant hybrids for things like corn. I think those types of projects are incredibly important and hope that the big breeding companies can continue to invest in that type of innovation. But we're also seeing that out here. UC Davis in California is hard at work on new varieties of tree nuts and other crops that can get by with less water. But another part of that is just the irrigation infrastructure, and thinking about flood irrigation is a very inefficient way to use water when so much of that, subject to evaporation. Now, you start to see these micro-irrigation drip systems that are providing very small, precise amounts of water at precise times. That's all enabled by data and sensor networks to help you identify when a particular plant is stressed, when it needs the water. Again, this convergence between the software, the data science, and the hardware in biology is a fascinating part of solving that water problem that you mentioned.

Deidre Woollard: The University of California Davis has just been one of the leaders that I've seen. Whether it's vineyards or things like that, they've got a great program there. Are there other universities or programs that you know of that are doing really interesting things?

Kit Barron: You know, it's pretty amazing in this country, the land grant network of universities that was set up federally, just a fascinating network of universities that have at their core a mission to advance agriculture. I'm not necessarily familiar with all of the different breeding programs out there, but it's pretty cool to see how much innovation is coming out, just broader agricultural innovation and innovators coming out of the land grant universities.

Deidre Woollard: Great. In this segment, I want to talk a little bit more about what FarmTogether does and what you're specifically doing with FarmTogether.

Kit Barron: I've been, in the first part of this podcast, talking a lot about all of the innovation applied to agriculture over the centuries and particularly last couple of decades, and all of that has generated a asset class that has historically appreciated significantly in value. We believe that everybody should have farmlands in their investment portfolio. We believe that because the long term appreciation stats that I mentioned, it's also a real asset hedge against inflation, it pays a dividend every year in terms of the harvest, and it's amazing. It's very uncorrelated to stocks and bonds and even very low correlation to commercial and residential real estate. We believe that farmland should be a core part of everybody's investing portfolio, but it's really hard to invest in a farm. Unless you're like Bill Gates and you have millions of dollars to throw around, or you want to get into farming yourself, you can't go and buy two acres somewhere and expect it to be a productive asset. What we're really trying to do is democratize investing in farmland, make it easy for anybody to own a share in a farm and share in the harvest and share in that appreciation over time.

Deidre Woollard: I know there's multiple kinds of crops. There's the row crops, obviously there's greens, there's tree crops. Is FarmTogether looking at different varieties and what locations are you looking at?

Kit Barron: We're growing quite quickly right now. We have a fairly wide lens. Where a lot of the team's background comes from and where about 80 percent of our investment so far have been focused is in the permanent crops space. That's the tree nuts, apples, and citrus. We're also actively expanding into row crops, so your corn and your soy, which tend to have slightly lower return but more regular cash flow, less development costs. Our permanent crop portfolio tends to be more focused in the West Coast and our row crop more in the Midwest. But we're certainly constantly looking for new opportunities and new geographies and building on our team and network on the ground.

Deidre Woollard: Is part of what you do figuring out which technology should be used on which farms, or identifying new companies that are doing interesting things? What specifically is your role?

Kit Barron: There's three problems that I'm bringing technology to bear on in my role. The first is finding farms that are a great fit for our investors and our investment strategy. The second is underwriting those farms efficiently, so how do we use data to help us understand risks and evaluate upside. Then the third is, once those farms are in our management portfolio, how do we roll out the right tech stack on the farm to help us remotely monitor and ensure that everything is going well for these investments that our investors own.

Deidre Woollard: I love that idea of the tech stack for farming. What kind of things would go into that tech stack?

Kit Barron: Well, first thing you need is what we call an FMIS or a farm management information system. This is basically the core software platform around which you store data, develop plans, evaluate performance, and generate reports. In addition to that, we have other sensor integrations that we're exploring, so how do we have an individual weather sensors or soil sensors on the property to help us remotely monitor. We can also subscribe to satellite feeds. We could get a regular supply of interesting images and insights from space on what's happening on the farm. All of these things together both help us identify ways to increase efficiency on the farms that we manage, but it also generates great investor collateral. Deidre, if you end up investing in our next organic pistachio deal, I would love for you to be able to login and see, pull out a camera of the pistachios when they're in bloom so you could literally watch the grass grow on the farm that you're a co-owner of. We really want to increase investor transparency with the assets of it all.

Deidre Woollard: Interesting. As you acquire new farms, are there farmers in place on there or are you bringing in the management team and the tech stack as part of the acquisition process?

Kit Barron: A big part of our strategy, and this is really fundamental to agriculture, is having good partners you work with on the ground. We tend to build portfolios around best-in-class operators in different parts of the country. They often specialize in a particular crop type. So we leverage our relationships with those partners both to find land, to come up with the agronomic plan, the redevelopment plan in some cases, and then they ultimately farm and manage the property on our behalf. We work with them to figure out what's the right set of technological solutions for a given farm without overly disrupting operations, of course.

Deidre Woollard: We're having a weird winter, a lot of ice storms. We've seen different things happening. How does FarmTogether plan for that and how are you building the future of climate change into your portfolio as you go forward?

Kit Barron: The first thing I'll say is we tend to think farmland's a great long-term investment, and so a lot of our deal time horizons end up being 8, 10, 12 years. So that really allows us and our investors to overcome any seasonal variation or extreme weather event. Now, that said, I should also mention, we've been piloting secondary markets to allow investors to get some liquidity in case there's an interest in that, and that's something we're going to be continuing to pursue on upcoming farm deals. That's how we think about the short-term weather events. We also get crop insurance to help protect against the unforeseen extreme events. That's a great financial product subsidized by the federal government through the farm bill. It's a really wonderful way to protect investment on the short-term. Now, longer term, you mentioned not just the extreme weather event but we also are contending with climate change. It's one of the things we think the most about when it comes to evaluating investment properties, particularly on the West Coast. We look at a couple of different things; we look at both potential downside associated with climate change; are there regions that will become less productive over time because of drought and/or temperature? But we also look at potential upside; has the frost-free date moved forward in the spring by a couple of weeks? Does that change the viable geography for a particular crop we're interested in? So I think there's both downside and upside. One very practical reality particularly in California is water supply risk, and so we're building out our data science model to help us really understand the field level water supply risk. It looks into environmental, biological, and some of the political water management practices, and helps us develop an index that says what's the water supply risk of a particular property. We really are very conservative when it comes to water and typically don't move on a farm unless we're very confident that it has a reliable, sustainably managed water source for the foreseeable future.

Deidre Woollard: That makes sense. I know a lot of investors are concerned about ESG investing, wanting to make sure that environmental, social, and governance factors are considered. Obviously, farming has a lot of attention in that area and people want to be part of things. Are you seeing more interest in organic? Are there concerns also about labor and things like that?

Kit Barron: Yeah, absolutely. We've recently signed on with a sustainable farming standard called Leading Harvest. We've committed to enrolling 100 percent of our acres in the Leading Harvest program which lays out a number of practices to help and promote regenerative and sustainable farming. One of our biggest and most successful deals was a transition from a conventional Red Delicious orchard to organic Cosmic Crisp and SweeTango orchard up in Washington. The family farm that we partnered with is one of the largest organic apple producers, Stemilt Growers, in the region. Beyond just the benefits of the transition to organic, that family operation has just a phenomenal reputation when it comes to the way they treat their workers and laborers. We were [laughs] on a webinar with our farming partner there and he was talking about how the company makes available full-time staff doctors for all the farm laborers. It's just this very novel way to take care of their valued labor supply, particularly during a time like 2020 during the pandemic. It's things like that and really finding these best-in-class operators that know how to treat their people, know how to treat the land, that give us confidence that the investments our investors are making are going to continue to appreciate in the long term.

Deidre Woollard: I love that. I think you said something really interesting though that I wanted to dive into. The transition from Red Delicious to Cosmic Crisp I think is interesting because Red Delicious traditional apple, nobody is really a fan of that apple anymore, whereas you have the Cosmic Crisp which is one of those trendy apples a lot of people have talked about. Does that play a role in some of the farming, that there are these different varietals or different foods that become trendy?

Kit Barron: Totally, and they're designed to be trendy. Red Delicious was trendy, but it was designed for a separate set of attributes. It was designed for long shelf life and great shelf appeal. That bright red, classic Red Delicious color was really novel on the supermarkets when it hit 25, 30 years ago, longer I guess. We're always on the lookout for interesting new hybrids. The Cosmic Crisp, it's a Honeycrisp cross with another variety, so it has this wonderful flavor profile, but it also has these great agronomic traits that make it easier to farm and easier to farm organically. The breeders are constantly looking at, how do you make the flavor profile, the shelf life, the shelf appeal, the agronomics attractive. Occasionally, they come up with these rock stars like Cosmic Crisp, and we were lucky enough to partner with a grower who had access to licenses of that variety, so we were able to pass that along to our investors.

Deidre Woollard: There's a concern about GMOs at the same time that there's an interest in GMOs and the idea that they can help grow more food in a certain area. How do you balance those two factors?

Kit Barron: I think there's a lot of confusion around the distinction between breeding, and GMO, and now, CRISPR-Cas9. One thing to note is the Cosmic Crisp, for example, was not a GMO. This was bred the traditional way that humans have been breeding plants since time immemorial. One example that I love talking about is Brassica oleracea, Latin name for broccoli, also the Latin name for kale, rutabaga, cauliflower, brussels sprouts, cabbage. All of these plants descended from the same wild ancestor, and it was through cultivation, traditional breeding methods over the past several thousand years that have got us this rich array of Brassicas, from brussels sprouts to cauliflower to broccoli and kale. That just shows you the amazing amount of genetic potential that exists in one humble cabbage species. That's all in the realm of traditional breeding. Then the GMOs, we were actively going in and modifying the genic material with genetic information from another species. Then you have, and this is really interesting, very relevant right now, the CRISPR revolution and these new gene-editing technologies. A court in France which has historically been one of the biggest opponents of GMO has recently ruled that CRISPR technology would not be considered GMO under the French agricultural standards. But that being said, GMOs have been around for several decades now and they're a huge part of the American food supply, and I think there's a lot of misinformation about the impacts. Of course, it's important to understand new technologies, particularly when you're having your kids eat them, but GMOs have been around the block. We talked about the drought-resistant corn project focused on developing genetic corn, and that's corn genetics that are more drought-tolerant. That's a great example of the kind of things that can come out of GMO technology. Another one I'd mention, I used to do some work down in South Africa when we're moving FieldView, The Climate Corporation's software product, to South Africa. I remember being in a cornfield that was full of birds, and I was talking to the farmer there, and he said, "Kit, this is so wonderful. This is thanks to GMO." I'm like, "What are you talking about?" He said, "Well, these plants now have the ability to create a protein that kills certain kind of pest insects, but it doesn't target the rest of the insects. It used to be we'd blanket-spray pesticides over every acre in this field and it would kill everything, beneficial and non-beneficial insects, and it would even kill the birds." He said, "Today, because of this very targeted GMO technology, we have birds again in my field and I love it." The other side of the coin is the story that you don't always hear.

Deidre Woollard: Excellent. You mentioned earlier that 25 percent of the world is involved in some form of agriculture. How much are you keeping track of what other countries are doing in terms of food supply, and is that impacting the way that FarmTogether looks at things?

Kit Barron: To date, at least from FarmTogether's perspective, we're very much focused on the US market, but we're a very young company. We've only been doing farmland deals for a little under two years now. We certainly have ambitions to take the model that we've been building out here in the States abroad, but I think there's a lot of interesting innovation happening everywhere, but I think in many ways, the United States is leading the charge. One stat that I love for reference is, the average global corn production is somewhere between 100 and 120 bushels an acre. In the United States, the average is around 180 from last year. Last year, the National Corn Growers Association, they hold a contest every year to see who can grow the most corn on an acre of farmland. The winner of it raised over 400 bushels an acre. That's like 3x what we produce and 4x with the global average. It's just a demonstration of how much opportunity there still is to increase yields using the latest technologies.

Deidre Woollard: Is there any concern about surpluses? I know in the past, there used to be surpluses because farmers would be concerned about prices. Is that something that factors into that as well?

Kit Barron: End of the day, it's a good [laughs] problem to have as a global economy. We'd much rather have surplus food than not enough. But I still think that maybe something like 30 percent of all food produce goes to waste in some part of the value chain. So yeah, it's certainly something I worry about and I think there's a lot of smart people focusing on it. Certainly, I think the beginning of the COVID outbreak in the United States came as a shock for me to see just huge mountains of onions and potatoes going to spoil because restaurants were closed and there's such a big consumer of some of those crops. It just gave me a reminder of how interconnected farmland is with the broader economy.

Deidre Woollard: Does FarmTogether think about government subsidies at all? Is there a relationship between FarmTogether and the farms and the government at all?

Kit Barron: Yeah. I think it's worth saying United States has some of the most generous farm benefit programs anywhere in the world, and maybe the exception of the EU, so things like double depreciation, super accelerated depreciation which prevents some great tax write-offs to both investors and farmers themselves. We benefit from a crop insurance program that is federally regulated and there's a whole suite of programs to incentivize more sustainable farming practices. For example, you could enroll in a strip till program which is less disruptive to the soil and allows the microbes to regenerate and there's a federal program that compensates you on a per-acre basis for adopting that practice. There are all sorts of programs out there that we can tap into to encourage better farming practices and also generate some additional returns for our investors.

Deidre Woollard: So accredited investors only right now?

Kit Barron: Yes. Today, it's accredited investors only and we're working on finding ways to bring farmland investment opportunities to more retail investors as well. But right now, it's accredited only.

Deidre Woollard: Excellent. Around how many deals are you doing on an average basis? Are you bringing on new farms every month or every couple of months?

Kit Barron: We're bringing on a new farm every other week or so.

Deidre Woollard: Oh, wow.

Kit Barron: We're going to try to significantly scale that up so we have a very regular cadence of farms on the platform, particularly given the last couple have sold out within hours. We've been so much demand for it, we created a program for first time investors. We only sold shares to first-time investors for the first three hours of the offering and I think the deal sold out in like three hours and 30 minutes. We're constantly looking for great farms [laughs] and we're going to be accelerating the pace of launching farms on the platform over 2021.

Deidre Woollard: Interesting. Do you find that your investors are diversifying within farmland? Are they getting some row crops and also getting some tree nut farms? Is that a consideration? Is location part of that?

Kit Barron: Absolutely. We're seeing a lot of repeat investors, which is great. But we also see there's a tendency to if they just invest in a pistachio orchard, they might go for an almond or an apple next time around. Certainly, not quite enough data to say that for sure, but definitely seems to be an interest in diversifying across different crops and geographies, and we want to play into it. I think eventually, we want to be able to offer baskets of farmland exposure so that individuals don't necessarily have to pick farm by farm. But we're a startup and constantly innovating so we love hearing ideas from investors about what they want, what's motivating them to invest in farmland. We're a very still quite agile company and able to move quickly to pursue good new ideas, so keep them coming.

Deidre Woollard: What's the exit strategy like? Because you mentioned that they're long-term holds, you're holding things for 8-10 years. Are the investors in for that period of time, or is there the ability to cash in their shares or give those shares to other people? How does that work?

Kit Barron: Originally, the way a lot of the investment offerings were written, it was that longer-term hold period. We felt that was really important to get the returns that we think are possible and history has shown us are possible in farmland. But long-term hold periods aren't for everybody. We realized that was going to become a barrier to investing in farmland. So we've begun to pilot secondary offerings where there'll be regular liquidity events, I don't know if it's going to be bi-annual or annual, but that allow investors to sell their shares or buy into a farm deal that they may have missed in the past. We ran a successful pilot of this I guess last month and it worked really well, so we're building out that as part of our product roadmap.

Deidre Woollard: That's excellent. As a wrap up, I just want to ask your opinion about some of the farming innovations we've seen lately in terms of both vertical farming and warehouse farming. AppHarvest recently went public. I know there's a lot of buzz about that one even though it's relatively small. What are you thinking about some of these innovations?

Kit Barron: We're going to need a patchwork of solutions to help feed the globe. Some of the indoor farming operations that I've seen, I visited a couple, they're relatively niche, like focused on culinary herbs for high-value urban supermarkets. That's not necessarily going to feed the planet, but the innovation that they're developing is going to, I believe, get better at better. Right now, it's really hard to compete with the sun and soil when it comes to free energy supply, but innovations in LEDs and solar technology I think are going to continue to show that these indoor farming companies are on the right track, and eventually, the unit economics will come around in just a matter of time. We may never feed the planet with rolling wheat inside a 200-story building in downtown Detroit, but I think they're certainly going to play a role in the longer-term food system. I'm actually really bullish, I did some work in the fisheries in the past, but I think there's a tremendous amount of potential for indoor fish farming. Just a really dense way to grow high quality, healthy animal protein. Particularly if we can build breeding programs to design feeding stocks for those fish and shrimp that are sustainably grown, I think it can really be a great part of the solution as well.

Deidre Woollard: Excellent. Thank you. Well, thank you so much for your time today. [MUSIC] This was a fascinating conversation. Just a reminder for listeners, you can find out more at farmtogether.com. Stay well and stay invested.

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